You’ve just launched your brand new SaaS startup. Your business offers cloud-based software, and everything is running smoothly.
Suddenly, you’re hit with your very first refund request. The customer subscribed to a monthly plan, and their next month’s payment just went through, but now they want to go elsewhere. So you’re wondering how to best handle this, and plan better for refund requests moving forwards.
What should you do in a situation where the customer shouldn’t be provided with a refund? Do you deny their request, make an exception, or try to convince them to stay?
The answers to those questions matter. Failure to properly address refund requests can lead to hampered customer satisfaction, higher churn, and poor word of mouth. Plus, it makes it a lot harder to convince affected buyers to give your brand another chance.
Fortunately, with some clearly defined guidelines in place, these situations don’t have to result in the same nightmare fuel that kept me awake at night, during my own stint as a support manager. Here’s how to handle refund requests with grace, professionalism, and an eye on your long-term goals.
1. Put a Clearly Outlined Refund Policy in Place
First and foremost, you can’t go processing refunds without a clear policy. No one wins if your support team is addressing each request in a vacuum.
You may already have some kind of customer service policy in place. But does it address refunds specifically and in detail? Does it cover what happens in situations that require some kind of judgement call?
If not, it’s time to invest some effort into building a functional policy that addresses the needs and concerns of your customers.
You don’t have to start from scratch. Check out a few successful competitors in your niche, and see what they’re doing. Read through their policies and take some notes. What makes sense for your customers and products? What doesn’t quite fit, or seems left out?
When creating your own policy, you’ll want to consider your business’ goals and balance them with customer needs. And be thorough, aiming to cover any possible situation that might include a refund request.
Here are some prompts to get you started:
- Do you offer physical or digital products (or both), and do you require different policies for each?
- Do you have physical locations where a customer can initiate refunds, or is it all conducted online? How does this affect the process?
- Under what circumstances is a refund typically allowed? Are there time or usage restrictions? And does this differ for various product types?
- If a customer requests a refund and does not meet the criteria stated in the policy, how is that handled? Do you take a firm ‘no exceptions’ stance, or can allowances be made on a case-by-case basis (and if the latter, when and by whom)?
- For physical products, does the customer need to ship the item back? Will you cover the shipping costs? What shape does the item need to be in?
- For digital subscription-based products, how does the refund process differ for those on month-to-month and yearly plans? For requests at the beginning and end of a billing period?
- How are refunds issued? Are they refunded back to the original method of payment, or do you provide an alternative such as store credit? What happens if there’s an issue with this process, or the customer requests a refund via a non-standard method?
We recommend creating two versions of your refund policy. The first should be customer-facing, concise, and straightforward. Address what buyers need to know, and lay out the typical rules and expectations.
Then draw up a second policy that contains the customer-facing text, along with other details that are only appropriate for your support team to see. This would include instructions about how to handle unusual refund request situations and make judgment calls, along with whatever advice/examples/tools will help them during the refund process.
2. Make Your Policy Easily Accessible To Customers
Once your policy is drafted, you’ll need to ensure that both your customers and support team can readily access it.
The more in-depth version of your policy should go wherever you keep resources for your service team’s reference. That might be in a shared folder, a project management tool, or an internal knowledge base.
As for the customer-facing policy, it’s best to make this available in multiple places. Buyers shouldn’t have to hunt around for one obscure link. Give them a few options!
Your website is a good starting point. Most businesses link to their policies (on refunds and otherwise) in their sites’ footers. Customers will often look there by default.
You might also want to include a link to or summary of your refund policy in whatever customers receive after purchasing an item. For physical products, this may be a receipt or ‘thanks for buying’ note. For digital products and subscriptions, it’s often a welcome email.
Finally, we’d highly recommend including your refund policy in your knowledge base. If you don’t have one yet, this is a vital resource for helping customers help themselves.
A knowledge base is a self-service tool, where customers can find answers to common questions or troubleshoot problems. It’s a great way to cut down on customer emails. It’s also a natural location for any kind of policies and service agreements buyers need to know about.
If you’re using Groove, our customer support help desk, you’ll find a knowledge base built right into your shared inbox. We’ve made this feature as easy as possible to use, with no technical setup required. All you have to do is write up the content and publish it.
Just remember that your knowledge base should also be easy to find! A link in your website’s footer is a must, and for best results, include one in the primary navigation as well.
3. Respond To Refund Requests Promptly
So you’ve done the prep work. It’s time to talk about how to actually handle refund requests as they come in.
When it comes to the refund process, speed is of the essence. Many customers will continue to purchase from a business if returns are carried out efficiently.
There are a number of roadblocks that may be impacting your support team’s ability to respond to requests in a timely manner:
- Lack of organization. If your support team is using a standard email client (Gmail or Outlook), it’ll be difficult to field requests by order of importance. You’ll want a platform that enables you to immediately identify and tag refunds.
- Automation hasn’t been implemented. Automation can be leveraged to quickly field and sort refund requests (and other inquiries).
- Agents have to respond from scratch each time. Typing up a unique message for every customer, especially in a common and fairly standardized situation like a refund request, is a waste of time. Better to create a canned response with placeholders for personal details. This also ensures consistency of response.
- Disorganized customer data. When buyers’ details are inaccessible (you can’t find an old email reply) or stuck in another channel (Facebook), your team needs to spend extra time to locate them. Ideally, everything about a customer’s history should be easily accessible in one place.
Making a help desk part of your process addresses these problems and more. It’s a centralized location for everything customer support, so all inquiries, records, customer data, and so on are just a click away.
Groove is built for small businesses, and we know you don’t have a lot of time. So you can automate many routine processes, such as tagging all ‘refund’ request emails and sending them into a specific folder. You can even have them all assigned to the same agent or team.
After that, you can create ‘instant replies’ for common refund scenarios. Agents can quickly access and personalize these as needed thanks to customer profiles:
They can even pull in content from your knowledge base as needed, and leverage smart AI features to improve responses:
All of this allows your team to respond more quickly, handle a higher ticket volume, and effectively prioritize. And they don’t have to sacrifice quality or consistency in the process.
4. Use Active Listening To Get To the Root Cause — Is a Refund Really Necessary?
You can just process a refund request and move on. Sometimes that makes sense.
In other situations, you’ll want to dig deeper. When deciding how to handle refund requests, use empathy and active listening to see if the issue(s) that prompted the request can be resolved.
In other words, do they really need a refund? Or are they just frustrated, and there’s another way you can help them achieve their goals?
Maybe they’re upset because they’ve been without service for hours, and they requested a refund in annoyance. However, this downtime was broadcast to customers and part of scheduled maintenance, to make way for new features that will improve service.
If they understand that, and you let them know how to prepare for these situations in the future (by checking your updates page, for example), they might change their minds. Doubly so if you acknowledge that you didn’t adequately warn customers, and promise (and actually implement) a better plan moving forwards.
Can you point the customer to resources that make them feel reassured, or clear up a misunderstanding? Potential reasons for a refund request are vast, and include:
- Frustrations and misunderstandings during product use. It’s possible your product isn’t suited to the customer, and they’re best off looking elsewhere. But it’s also possible your product does exactly what they want, and they’re having trouble using it effectively. You can provide help, point them towards key resources, and otherwise encourage success with the product.
- Misaligned expectations or failure to deliver. If you fail to deliver on customer expectations, you lose their trust and ultimately their business. This could be related to quality, service, and/or communication. Addressing the root cause is important, and can make a real difference. Buyers don’t expect businesses to be perfect, but they do expect them to knowledge and fix mistakes.
- Lack of customer service. A single negative experience with customer service can tarnish your brand’s reputation and result in a refund request. Unhelpful interactions, difficulty contacting support, and unresolved issues leave people feeling insecure about your business’ priorities. Retraining customer support helps you realign quality service with branding.
- Competitive pricing. Sometimes, customers request a refund simply because your competition is offering a better deal. To address this, you’ll need to differentiate yourself based on the value your product/service offers when compared to the competition. If you can quantify the increased cost and show customers you’re worth the small added expense, they’re more likely to stick around.
5. Communicate Honestly and Clearly with the Buyer
The above advice aside, most of the time you’ll probably refund the customer as defined in your policy.
When you do that, make sure the buyer knows what to expect. Don’t assume they’ve read your refund policy and know how you’ll handle their request.
Communicate time frames, refund methods, and so on in a concise, clear way. You can use an automated email template here to maintain consistency.
What about when a customer requests a refund, but one shouldn’t be provided via your policy?
First, make a decision before following up with the buyer. If exceptions are sometimes allowed, and you can offer one in this situation, great! Go back to the customer with a clear plan of action and any additional details they should know.
If you have to deny the request, communicate that clearly and honestly to the customer. State the reasons why in a professional way, and acknowledge that you understand they might not be happy with the decision.
Then, if possible, offer something to soften the blow. That might be a partial refund or some other compensation (like a discount on a plan/product that may better suit them).
6. Follow Up with the Customer To Repair the Relationship
Just because a customer requested a refund doesn’t mean they’re a lost cause. They may purchase other products/services, or return in the future after you’ve made changes or they’ve experienced dissatisfaction with your competitors.
So don’t forget to do what you can to repair the damaged relationship! We already mentioned offering some kind of compensation. Even if you do approve the refund, another small perk can leave them feeling more positive about the interaction.
That aside, it’s a good idea to keep track of these buyers, so you can approach them in the future via winback campaigns. In other words, you can target high-risk customers with exclusive promotions intended to rekindle interest.
To do this effectively, consider why they requested the initial refund, and provide strong incentive that addresses their primary concern.
Was it a pricing issue?
- Provide a discount to return, incentivizing a higher-tier plan at a more affordable price.
- Offer a free month of subscription time when they sign up, a credit on their account for the next billing cycle, or a coupon code for a future order.
A technical problem?
- Offer prioritized support, like white-glove service.
- Provide access to educational resources on key features.
- Share recent improvements in the product.
Reignite your support with a limited-time free 30-day trial upon signup, and see how we’ve improved [Feature X]!
If you want to make this process easy, Groove integrates directly with popular email marketing platform Mailchimp. You can use customer data pulled from Groove to send out re-engagement campaigns using automated email templates.
Finally, regardless of the reason for the refund request, remember to always offer a genuine apology.
It’s not enough to say “We’re sorry”. Ensure that they feel heard, use relevant account details and conversation history to personalize your message, and make it clear that you’ve reached out to them personally and value their business.
Making Refunds Easy and Painless – For You and Your Customers
Operational inefficiencies strain the refund process. And your business can’t afford to waste time or resources.
Not to mention the negative effect poorly managed refunds have on your brand image. When customers get the classic runaround, it leads to lost revenue, increased service costs, squandered time, and bad reviews.
Don’t drive your customers away due to inefficient workflows. While your support team plays an essential role in processing refunds and replying to requests, they’re only as productive as the software they use.
Sign up for a free trial of Groove today, and make it easier for your team to handle refund requests – and all customer inquiries – quickly and successfully!
